Shares of Ruchi Soya Industries continued to face selling pressure, dropping 19 per cent to Rs 706 on the Bahrain Stock Exchange in trading on Wednesday amid massive trading volumes ahead of the listing of the allocated shares through a follow-up public offering (FPO). ). The edible oil company’s stock is down 28 percent in the past week, compared to a 2.8 percent rise in S&P BSE Sensex.
At 11:06 a.m. Ruchi Soya was trading 10 percent lower at Rs 791, compared to a 0.95 percent decline in S&P BSE Sensex. Over-the-counter trading volume jumped more than fivefold with 8.34 million shares of stock representing 2.8 percent of the company’s total equity traded on the New York Stock Exchange and the Bahrain Stock Exchange.
Ruchi Soya said on Tuesday after market hours that the FPO Issuing Committee at its meeting held on April 5, 2022 agreed to allocate 66.15 shares of equity at a par value of Rs 2 each, for a total amount of Rs 4,300 crore, according to the FPO issue. The company has set the issue price at Rs 650 per share.
As per the allotment of shares in the issue, the paid-up capital of the company has increased from Rs 59.16 crore to Rs 72.40 crore, the company said.
The objectives of the new issue are – repayment/prepayment of Rs 2,664 crore of loans, financing of additional working capital requirement of Rs 593 crore and the remaining amount will be used for general general purpose.
As per SEBI directives, the minimum public shareholding requirement for a listed company should be 25 percent, thus, Ruchi Soya announced the FPO, as the company’s promoters sought to reduce their shareholding to comply with the regulator’s directive.
Patanjali Ayurvedic led by Baba Ramdev owns 98.9 per cent in Rochi Soya while the public owns only 1.1 per cent. After the FPO, Patanjali’s contribution is expected to decrease to 81 per cent, while the public contribution will rise to 19 per cent. This move could have helped in better price discovery.
Ruchi Soya has a recognized brand, extensive distribution network and experienced management team. Going forward, the company will continue to grow its relationship with Patanjali, focus on increasing higher margin products, and improving operating efficiency. Furthermore, expanding the distribution network and managing the supply chain will be critical, the analyst at Religare Broking said in an FPO note.